Federated Investors' latest "Month in Cash" brief is entitled, "Trump challenges Fed's independence." They write, "One of the defining characteristics about the Federal Reserve is that it operates independently from the rest of the U.S. government. Most politicians don't talk about it much, let alone tell it what to do publicly. Of course, President Trump is not a typical politician, and it is not surprising he recently said he was 'not thrilled' with the recent hikes because of their potential to stem economic growth. After all, he criticized former Chair Janet Yellen during his campaign (that time for keeping rates too low). Although Jerome Powell was named a Fed governor by the Obama administration, Trump nominated him to lead the central bank, and the president might think he has sway. Or maybe Trump is just saying this to the press because he knows he has no real pull." Money market CIO Deborah Cunningham adds, "With the two hikes already made this year, many cash and liquidity rates across the industry have risen, with expectations rates may continue to increase in the second half of the year. Many cash managers have been putting new dollars into money market funds, with the expectation that re-allocation will ramp up because money funds diversify liquidity management while offering competitive return. Assets in prime funds continue to grow. We kept the weighted average maturity (WAM) of our prime funds in a 30-40 day range; the range for our government and municipal funds remained at 25-35 days. The London interbank offered rate (Libor) barely moved in July, with 1-month at 2.08%; 3-month at 2.34%; and 6-month bumping up just 2 basis points to 2.52%. The Treasury curve was 1.88%, 1.97% and 2.14% for the same periods."

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